Naver acquires Japanese delivery service Demae-can

Korea’s No. 1 search engine Naver is continuing efforts to discover the next “Line,” the most used free instant messaging application in Japan that was developed to help people communicate after a big earthquake hit east Japan in 2011.

Naver will invest 30 billion yen (337.7 billion won) in Japanese food delivery service Demae-can, which the platform operator believes can flourish with the skyrocketing number of people ordering groceries online due to fear of the COVID-19 pandemic.

The sales of e-commerce firms have soared in Korea for the last two months as much of the nation have been staying at home to prevent the further spread of the virus. Korea was second to China in the number of confirmed cases just a few weeks ago.

The situation in Japan is not at as critical a level as it is in the U.S. or many European countries but it is starting to see an increase in the number of infected patients and people are starting to panic buy large quantities of daily necessities.

Demae-can’s non face-to-face business has established a solid foothold in the Japanese market yet.

It is one of the top two delivery service players with Uber Eats in Japan and it serves 3.2 million users with some 20,000 franchises delivering their food through the firm. Every year, Demae-can processes nearly 30 million orders.

Naver hopes its instant message platform can create synergy with Demae-can by attracting its customers and utilizing its infrastructure through collaboration.

Line previously established a joint-venture “Line Bros” with Korea’s Woowa Brothers, which founded the country’s largest delivery service firm Baedal Minjok. Line Bros started a premium lunch box delivery service in 2014 that continued for one year.

In 2016, Line signed a deal with Demae-can to start a delivery service for daily necessities but there were limits to establishing optimal integration between the businesses.

When Naver raise 30 billion yen together with Line to purchase Demae-can’s newly issued stock in May, it will acquire over 60 percent of the shares to become the largest shareholder.

A Naver official said Line is currently working to combine its management with Yahoo Japan and when the process is complete, the merged corporation will create a high level of integrated service in the delivery service sector.

Meanwhile, Naver will also invest an extra 4.2 billion won into its corporate platform business, “Line Works.” Naver said it will also purchase newly issued stock of “Works Mobile,” which operates Line Works.

The search engine operator said the investment is aimed at expanding its platform business in Japan. Works Mobile is co-owned by Naver and Naver Business Platform with a 70 percent and 30 percent stake, respectively.